Commercial Metals Company (CMC)

Interest coverage

		Aug 31, 2024	May 31, 2024	Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	683,564	783,839	930,363	1,047,001	1,162,094	1,268,778	1,368,282	1,644,604	1,565,856	1,417,421	1,179,517	759,079	586,228	481,892	405,291	406,503	433,816	454,375	476,436	424,391
Interest expense (ttm)	US$ in thousands	47,893	44,010	40,771	38,838	40,127	46,098	50,653	52,719	50,709	48,138	46,670	48,680	51,904	54,207	57,651	59,518	61,837	65,577	68,681	71,288
Interest coverage		14.27	17.81	22.82	26.96	28.96	27.52	27.01	31.20	30.88	29.44	25.27	15.59	11.29	8.89	7.03	6.83	7.02	6.93	6.94	5.95

August 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $683,564K ÷ $47,893K
= 14.27

The interest coverage ratio, which measures Commercial Metals Company's ability to meet its interest obligations with its operating income, has displayed a positive trend over the past few quarters. The ratio has consistently been above the industry benchmark of 5 in recent periods, indicating the company's strong ability to cover its interest expenses.

Commercial Metals Company's interest coverage ratio has shown a significant improvement from 5.95 in the first quarter of 2020 to 22.82 in the second quarter of 2024. This upward trend signifies an enhancement in the company's earning power relative to its interest expenses, indicating a reduced risk of default on its debt obligations. The continuous increase in the interest coverage ratio suggests that the company's profitability and operational efficiency have improved over time.

Additionally, the interest coverage ratio peaking at 31.20 in the third quarter of 2022 demonstrates the company's robust financial position and ability to generate sufficient operating income to meet its interest payments comfortably. This strong interest coverage ratio reflects positively on Commercial Metals Company's financial health and ability to manage its debt effectively.

Overall, the consistent improvement in the interest coverage ratio indicates that Commercial Metals Company has a strong financial position and is well-equipped to meet its interest obligations in the foreseeable future.